Former trustee says government should give up managing Indian trust funds

WASHINGTON (AP) _ A veteran banker who once ran Indian trust reform testified that the government needs outside help to assess Indian claims. <br><br>``Sooner or later, the government has to come to the

Friday, May 2nd 2003, 12:00 am

By: News On 6

WASHINGTON (AP) _ A veteran banker who once ran Indian trust reform testified that the government needs outside help to assess Indian claims.

``Sooner or later, the government has to come to the conclusion of outsourcing, or getting out of the business,'' Paul Homan said Thursday, the first day of a $137 billion suit claiming the Interior Department has mismanaged American Indian money. ``The government simply does not have enough critical mass to manage this correctly.''

Homan, who served as the first special trustee before resigning in 1999 in protest of what he said were attempts to obstruct his efforts to reconcile trust accounts, was to resume testifying Friday afternoon in U.S. District Court Judge Royce B. Lamberth's court.

The trial, expected to last five weeks, is the second in nearly seven years in the largest class-action lawsuit ever against the government.

The suit was filed on behalf of more than 300,000 Indian plaintiffs in June 1996 to regain billions of dollars in uncounted revenues from oil, gas, timber and cattle grazing contracts that were paid to the government for forwarding to landowners.

After the first trial in 1999, Lamberth ordered the department to account for the money and repair the management flaws. This trial is expected to determine how the department should follow through with that order.

The government now proposes a historical accounting, costing an estimated $335 million over at least five years, based on limited statistical sampling and transaction-by-transaction analysis.

Lamberth was immediately skeptical. ``Every time estimate I've been given by Interior has slipped, so I assume that one will, too,'' Lamberth told government lawyers.

Dennis Gingold, an attorney for the Indian plaintiffs, said his clients shouldn't have to wait another five years for a payout. He said problems have surfaced which ``plaintiffs never dreamed of when this case was filed.''

The plaintiffs' plan would identify all money generated over the years from individual Indian trust lands by using independent databases such as those relied upon by the oil and gas industries _ a process they claim could take only a matter of weeks.

Justice Department attorney John Stemplewicz characterized the Indian plaintiffs' approach as an overly idealistic wish list.

``It's going to be an arbitrary, rough-justice sort of solution,'' he said of the Indians' plan.

Congress passed the Indian Trust Fund Management Reform Act in 1994 to try to fix the long-standing problems by, among other things, creating the special trustee office first held by Homan.

The Bush administration and the Clinton administration before it each admitted they couldn't account for all of the money that is supposed to be in the 116-year-old trust, funded primarily by royalties from oil, gas, timber and mining on Indian land.

Lamberth held Interior Secretary Gale Norton in contempt last September for failing to fix management problems with the trust. He also ordered Norton to submit the detailed accounting plan and fix the long-standing management problems. The department has appealed that ruling.

The judge sanctioned government attorneys for what he said were attempts to cover up misrepresentations to him. He also had held Norton's predecessor, Bruce Babbitt, and Clinton Treasury Secretary Robert Rubin in contempt.

The problem dates to 1887 when Congress began putting tribal land in trust. As it later broke up the tribal land into allotments to individual Indians, the government kept poor records, making it that much harder to decide the growing number of probate cases involving the many Indians who died without wills.

Indians suing the government now claim the mismanagement cost the Indian landowners at least $10 billion.